Square launches in Canada

On Tuesday, FP Tech Desk editor Matt Hartley had a chance to speak with Jack Dorsey, co-founder and chief executive of Square, about the company’s Canadian launch, its recent deal with Starbucks and the future of mobile payments.

The man who created Twitter is bringing his latest brainchild to Canada.

On Wednesday, Twitter creator and co-founder Jack Dorsey will launch his newest business venture, Square Inc., in Canada, the first international market for the three-year-old San Francisco-based company.

Regularly touted as one of the hottest startups in the technology industry, Square produces a small credit card reader that plugs into the headphone jack of a smartphone or a tablet, enabling even the smallest-scale business owners to accept credit card payments. The service offers free registration and Square takes a 2.75% fee from each transaction.

Already in the United States, more than two million individuals and businesses are accepting credit card payments with Square, and the company is helping facilitate US$8-billion in sales each year. As well, coffee giant Starbucks Corp. recently announced plans to begin using Square’s technology to process credit card transactions at all of its U.S. locations.

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Now, Mr. Dorsey believes Square has the potential to help thousands of Canadian businesses of all sizes, and individual service providers — such as piano teachers, personal trainers and taxi drivers — to expand their reach and clientele bases by accepting payments on mobile devices.

“We’ve seen a lot of entrepreneurial spirit in Canada; a lot of people choosing to start their own business or start their own service, or really just do what they want to do,” Mr. Dorsey said in an interview with the Financial Post.

“The major blocker that Square solves is enabling everyone to accept credit card payments. So anyone with a Visa and Mastercard can now pay anyone with a cellphone … we’re extremely excited to get Square outside of the United States and bring it to more and more markets, but Canada was the natural first step for us.”

Canadians can sign up for a free Square card reader through the company’s mobile application, or, beginning next week, pick one up at an Apple Store for $10 (Square includes a $10 credit with readers purchased at an Apple Store).

Canadians will be able to accept both Visa and Mastercard payments through Square at the outset, but Mr. Dorsey left the door open for other forms of payments in the future, such as debit cards and other credit cards.

“We’re going to start as we did in the United States and we’re going to start with Visa and Mastercard and then we’ll build technology to accept more and more,” he said.

Square has been running a pilot project with a handful of small business owners in Vancouver and Toronto to test the market over the past few weeks.

“In the United States about three years ago, we started with three merchants just to learn from them about what they needed,” Mr. Dorsey said. “We’re doing the same thing in Canada, so we’ve been looking at a few merchants all over the country. Just to learn from them.”

Of course, Square isn’t the only technology aiming to expand the market for mobile payments. Many smartphone makers, including RIM, are moving to include NFC or near field communications chips in their devices, enabling users to pay for items simply by holding their smartphone near a digital reader. But Square does appear to be a technology investors are betting on.

Last month, Square closed a US$200-million venture capital funding round, which included investments from Citi Ventures, Rizvi Traverse Management and Starbucks, valuing the company at more than US$3.25-billion, according to All Things D.

According to Mr. Dorsey, the investment will help the company with its international expansion efforts and to expand the company’s employee base, which currently stands at just over 400.

While the technology is currently only available for Apple Inc.’s iOS devices — including the iPhone, iPad and iPod Touch — and Google Inc.’s Android platform, Mr. Dorsey didn’t rule out the possibility of expanding the technology to other mobile ecosystems, such as Research In Motion Ltd.’s BlackBerrys, should the demand exist from consumers.

Although Square currently has no plans to open a Canadian office, the company already has one employee based out of Canada’s unofficial technology capital, Waterloo, Ont.

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